BB&T Corp.'s (BBT) fourth-quarter earnings climbed 12%, topping analysts' estimates as the company set aside less to cover credit losses.
The mid-Atlantic and Southeast regional bank had grown its bottom line largely on higher revenue in recent quarters, contrasting with many peers that have driven earnings by sharply cutting the amount they set aside to cover loan losses.
But much of the latest quarter's improvement was due to a lower credit-loss provision, with the figure dropping to $643 million from $725 million a year earlier and $770 million in the prior quarter.
BB&T reported a profit of $208 million, or 30 cents a share, up from $185 million, or 27 cents a share, a year earlier. Analysts polled by Thomson Reuters most recently forecast a profit of 26 cents.
Net interest income edged up 0.7%, while noninterest income declined 0.6%.
Net charge-offs, or loans lenders don't think are collectible, were 2.02% of average loans, up from 1.83% a year earlier but down from 3.31% the prior quarter. Nonperforming loans, those near default, were 2.49%, down from 2.51% and 2.64%, respectively.
Shares closed Thursday at $27.08 and were inactive premarket.
-By Matt Jarzemsky, Dow Jones Newswires; 212-416-2240; email@example.com
If you back out the cut in loan loss provisions, they only made $126 million. Is that a red flag? Shouldn't they be making more reoccuring income? Lower loan losses is good for the future, but what about income. I worked there three years ago, before the credit crackdown and finding bookable loans was difficult then. I can't imagine how hard it must be for lenders to find quality deals everyone agrees to booking. That is what keeps me up at night with my holdings.